Short sale vs Foreclosure in Real Estate

The simple truth is a short sale is less damaging to someones FICO(credit) score than a foreclosure. In a short sale the bank agrees to sell the property at a price the bank will take. It all depends on the net receipts after all conditions have been met. The bank needs a certain amount of funds to take the loan off of the books. In a foreclosure, the bank starts from scratch to sell the property. In most cases attorneys are involved which adds more money to the payoff amount.

This is the reason banks are taking less time to make a decision on short sales, given the listing broker is familiar with the process.  There are certain documents that a bank needs from the seller in order for the process to go smoothly. If you find yourself in this situation of needing to move due to financial concerns, the short sale is the better of the two.

People who have gone through a short sale can usually buy a house after 2 years vs. 5-7 yrs after a foreclosure. Be sure to check with your accountant before making this decision.